The U.S. retirement market represents the world’s largest pool of long-term capital, totaling just more than $48 trillion in assets.ⁱ Over recent decades the system has been undergoing a structural shift. Responsibility for retirement outcomes has increasingly moved from institutions to individuals, as defined contribution plans such as 401(k)s and Individual Retirement Accounts (IRAs) have replaced traditional defined benefit schemes.

In response, retirement savings are increasingly dynamic as they are built, moved and managed over the course of an individual’s working life. Job changes, provider switches and consolidation decisions mean that retirement assets are in motion more frequently. 

More than $1 trillion is transferred annually through rollovers, the process by which funds move from one retirement account to another.²  At the point of transfer, they are typically liquidated into cash before being reinvested – creating a critical window where funds are temporarily out of the market. The duration of this window matters, since even minor delays can expose individuals to market timing risk – particularly in periods of volatility – and directly impacting long-term retirement outcomes. 

Minimizing the time that funds remain uninvested is therefore a top priority. Yet, despite the scale and importance of these flows, the process has lagged broader financial innovation. In practice, transfers are often subject to delays that leave funds out of the market for extended periods, creating a gap at precisely the point when speed matters most. This raises a fundamental question: why does this inefficiency persist and what form would a modernized approach take?

How retirement rollovers work – and where the process breaks down

Rollovers typically arise in two scenarios, depending on the type of pension plan. The first is the defined benefit path, where an individual with a pension may opt to take a lump sum and move it into another account – an IRA for example – rather than receive an annuity. The second, and far more common, is the defined contribution path – covering plans such as 401(k)s and 403(b)s – where employees build up individual retirement savings over time and often, upon leaving an employer, must transfer those funds to a new plan or provider to remain invested. 

Once the decision to move funds is made, the transfer itself typically follows one of two mechanisms: a direct rollover or an indirect rollover. The most common is a direct rollover, in which funds are made payable and move directly from one financial institution (FI) to another. In an indirect rollover, the funds are distributed to the participant first – subject to mandatory withholding – and must be redeposited within 60 days into another eligible retirement account, to avoid penalties and to recover any taxes withheld at the time of the payment.³

Regardless of how the funds move, the operational reality is that retirement rollovers are still frequently executed using paper checks, with electronic payment options often unavailable. So what does the process actually involve? As I discovered when rolling over my own retirement savings, the answer is surprisingly manual.

Once a participant requests a rollover, the process begins with the originating provider liquidating the relevant assets and preparing a payment. A physical check is then printed and mailed either to the receiving institution or to the participant directly, making progression to the next step contingent on postal delivery. On receipt, the new provider must manually process the check – validating details, reconciling the payment against account information, and managing any exceptions or discrepancies before funds can be credited and reinvested.

This process creates a clear tension with the needs of retirement rollovers. At its core, a rollover is a time-sensitive event: the longer assets remain uninvested, the greater the potential impact on retirement outcomes. Yet given the number of touchpoints and opportunities for delay, the funds are typically out of the market for 11 days – and in many cases as long as three weeks – leaving individuals exposed to market movements.⁴ 

This can also introduce compliance implications. In indirect rollovers, individuals must meet strict requirements, including redepositing funds within 60 days to avoid taxes and penalties. Delays, errors or confusion during an already complex manual process can thus have direct financial consequences for participants.

Sending high-value checks – often representing six- or seven-figure retirement balances – through the mail creates a clear fraud vulnerability, with checks more than 16 times as likely as electronic payments to be lost, delayed or stolen.⁵  In 2023, for example, an individual transferring his 401(k) from a former employer to a new plan fell victim to fraud after his rollover checks were intercepted and fraudulently cashed.⁶

Modernized rollovers – the digital alternatives

So what digital alternatives to physical checks exist? Automated Clearing House (ACH) payments might appear the most obvious option given their scale, low cost and widespread use across the U.S. payments ecosystem. Last year ACH processed more than 35 billion transactions with a total value of approximately $93 trillion.⁷  

Yet despite this scale, several structural barriers limit their broader adoption for retirement rollover transfers. This is because ACH was not designed to support many of the specific data fields required for these transfers, meaning that critical information – such as whether rollover balances consist of employee or employer contributions, or whether funds are pre-tax or post-tax – often cannot be transmitted within standard ACH payment messages. 

In practice, this means receiving institutions often still need to exchange information manually outside the payment itself before funds can be properly allocated and invested, which prevents straight-through processing (STP). While certain supplementary account-transfer frameworks – such as ACAT (Automated Customer Account Transfer System) – can help bridge this gap, adoption is far from universal across FIs. 

Although wire transfers offer another digital alternative that supports the richer payment information required for rollover processing, the economics are far less attractive. Sending and receiving wires remains relatively expensive, making them more suitable for exceptional or high-value transfers than for routine rollover payments activity at scale.

Most importantly, neither ACH nor wire transfers fully solve the central challenge: time out of market. While both methods digitize the movement of funds, participants may still wait hours or days for settlement, reconciliation and reinvestment to occur.

This makes real-time payments increasingly relevant; combining richer payment data capabilities – similar to those available in wire transfers – with materially lower costs and 24/7/365 availability. Instant payments address the rollover challenge more directly as funds can move, settle, and become available for reinvestment within seconds rather than days. Recent payment limit increases across the RTP® Network and The FedNow Service, from approximately $1 million to $10 million, are also making these rails far more viable for higher-value retirement rollover transactions. ⁸ 

While challenges remain in addressing the scaling of real-time payments for retirement rollovers – including certain client authorization and operational requirements – the foundations for moving away from the continued reliance on checks already exist today.

Is the future of retirement rollovers instant?

Checks increasingly appear as yesterday’s payment instrument: slow, manual, operationally intensive, and vulnerable to delay and fraud. Real-time payments, by contrast, provide the foundations for a faster, always-on and data-rich model more closely aligned with today’s expectations across the broader payments ecosystem.

Retirement rollovers should be no different. These are important, potentially life-changing payments, and the current combination of long wait times, fraud exposure and extended periods out of the market creates unnecessary stress and risk for individuals.

While work still remains to establish the operational and technical foundations needed to support a broader transition from checks to real-time payments in this space, the underlying building blocks are here.

As instant payment infrastructure matures, transaction limits increase, and FIs continue investing in modernization, retirement rollovers could become a significant area of payments innovation over the coming years – reshaping how retirement assets move between providers, while materially reducing time out of market for individuals.